Transportation stocks are typically leading indicators for the economy and the stock market. They did well in the first half of the year, outperforming the S&P 500 by almost 4%, despite the fact that most of that gain was in the first quarter. While rising interest rates have become a concern, the current economic conditions certainly do not warrant a reduction in the Federal Reserve’s bond buying program, and an actual rise in rates may be as far away as 2015. Jefferies is bullish on the transports and the economy for the second half of the year, and it has a list of top stocks to buy.

CSX Corp. (NYSE: CSX) currently operates a 21,000-mile track network, serving 23 states east of the Mississippi. Demographically speaking, it ranks among the most attractively positioned railroads, accessing the most populous regions in the United States — New York City, Chicago, D.C., Atlanta and Boston. Jefferies has a $29 price target. The Thomson/First Call estimate is at $27. Investors are paid a 2.6% dividend.

Expeditors International of Washington Inc. (NASDAQ: EXPD) is a non-asset based provider of global logistics services operating through a worldwide network of offices and exclusive or non-exclusive agents. The company’s customers include retailing and wholesaling, electronics and manufacturing companies around the world. It contracts with airlines and ocean carriers to move customers’ freight around the world. Jefferies has a $44 price objective, and the consensus target is at $43. Investors receive a 1.6% dividend.

FreightCar America Inc. (NASDAQ: RAIL) is a top small cap name to buy at Jefferies. The company produces both aluminum bodied and coal cars. Its coal car segment represents the largest part of the company’s business, comprising 93% of total sales. It also produces replacement parts and offers fleet management services to third parties. Jefferies price target for the stock stands at $23, but the consensus is lower at $18. Investors are paid a 1.4% dividend.

Norfolk Southern Corp. (NYSE: NSC) is a favorite stock to buy at Ken Griffin’s Citadel Investment Group. The billionaire currently owns 2.6 million shares of stock. 13F filings show that is up dramatically from the beginning of the year. Jefferies has an $89 price target, while the consensus is at $85. Shareholders are paid a 2.8% dividend.

Ryder Systems Inc. (NYSE: R) announced yesterday that Food Authority, a family-owned and operated food service provider that distributes produce and grocery products to Massachusetts, Connecticut, New York, New Jersey, Virginia, Maryland, District of Columbia and Pennsylvania has refreshed and expanded its fleet with 66 new refrigerated heavy-duty vehicles under a full-service lease from Ryder. Jefferies has a $72 target for the stock, and consensus target is $70,50. Investors are paid a 2.0% dividend.

Union Pacific Corp. (NYSE: UNP) does not have the legacy pension liabilities that many old-line industrial companies have. Unfunded pension liability is only about 1 percent of market cap. In addition, rail volumes and earnings have continued to improve. Jefferies target for this top transport is $177, which is above the consensus target of $161. Shareholders receive a 1.8% dividend.

XPO Logistics Inc. (NYSE: XPO) is another top small cap name for investors to buy. XPO Logistics is growing at more than 100% year-over-year through acquisitions and cold starts. It has tripled revenue since Bradley Jacobs became the CEO and is still less than 1% of the $50 billion truck brokerage business. The Jefferies price target for this stock is $23, and the consensus is at $21.

While the transports could not maintain their blazing first-quarter move, the second-quarter underperformance may be just what investors need to gain an entry spot to these top names. Barron’s was very positive on the railroad stocks this past weekend, saying top names could be up 20% going forward.

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